Canada Post segment reports $13-million Q3 profit
As they were in the second quarter, the results are mostly due to the impact of lower employee benefit costs, continued growth in the Parcels business and new pricing measures for Transaction Mail contained in the Corporation’s Five-point Action Plan.
For the first three quarters of 2014, the Canada Post segment reported a profit before tax of $39 million compared to a loss before tax of $165 million for the same period in 2013 and is expected to report a profit for 2014.
Volumes in Transaction Mail, Canada Post’s core business, nevertheless continued to fall as mailers and consumers turn to digital alternatives. Volume erosion picked up speed in the third quarter after being lower than expected in the second quarter.
Compared to the same periods in 2013, volumes decreased by 58 million pieces or 6.1 per cent in the third quarter and by 175 million pieces or 5.1 per cent in the first three quarters of 2014.
Employee benefit costs for the Canada Post segment decreased by $48 million for the third quarter of 2014 and by $161 million for the first three quarters of 2014, compared to the same periods in 2013. This is the result of strong pension asset returns in 2013 and an increase in the discount rates used to calculate benefit plan costs in 2014.
Employee future benefits, including pension, continue to be highly volatile and unpredictable and remain a significant factor in the Corporation’s operating results.
The Five-point Action Plan, announced in December 2013, is realigning the postal service with Canadians’ changing needs and will return it to financial self-sufficiency. To date, approximately 800,000 households have either been converted from delivery at the door to community mailbox delivery or are in various stages of the conversion process for 2015.
In addition, a strong focus on consolidating processing operations in light of the declines in mail volumes is delivering savings.
The Canada Post Group of Companies1 reported a profit before tax of $35 million in the third quarter, compared to a loss before tax of $109 million for the third quarter of 2013.
For the first three quarters of 2014, the Group of Companies’ profit before tax was $84 million, compared to a loss before tax of $134 million for the same period in 2013. ■